A Case Study in Living Beyond Your Means

Living Beyond Your Means

Three years ago, a friend of mine – pregnant with her second child – decided her starter home wasn’t big enough for her growing family. This friend has what you might call a case of “Affluenza” – she’s got a serious commitment to keeping up with the Jones’. So she and her husband started the process of buying a house.

They wanted all the bells and whistles: a large home on a large lot in a great neighborhood near great schools. Unfortunately, their eyes were bigger than their pocketbooks; they couldn’t find a home that suited all their “wants” in their price range. Rather than settle – or stay in their starter home until their budget allowed them to afford their dreams – they took a chance on a foreclosed home.

The home, as well as the surrounding property, was in shambles. The interior hadn’t been updated since the 70s; the exterior, a densely wooded lot, hadn’t been kept up in years. The pool out back looked like a scene out of one of those “When all the people die and nature takes over” documentaries.

But they were committed to buying a house come hell or high water (actually, funny note here: the house was in a flood zone, and they face HUGE annual flood insurance payments), so they put in an offer. After several months – foreclosures are notoriously hard to buy in any type of fast or easy manner – the home was theirs. And that’s when the real work began.

Although they got it for roughly a third under market value, they knew that their new home was nowhere close to fulfilling their dreams at that point. They embarked on an expansive home remodel, starting from the outside and working their way in. The disgusting swimming pool – a safety and health hazard for their now two young children – was the first task. During the work, it was discovered that the fiberglass lining had a crack in it; rather than give up on the idea of having a pool, they chose to sink another $20,000 into the project to rip out the old liner, install a new liner, as well as brand new filtration and a solar heating system for it.

That same summer, my friend pulled her older child out of his preschool and decided to homeschool him. She said money wasn’t a factor; I didn’t believe her.

The next year, they started to tackle bathrooms. But they didn’t have enough money to finish the project, so they only updated their first floor powder room and the upstairs hall bath; the family shares that one full bath, and doesn’t use the on-suite master. They had to turn off the water to that room, because the fiberglass shower leaks, as does the toilet.

The next year, they moved on to the kitchen, while simultaneously doing work on their floors and deteriorating plaster walls themselves.

This year, my friend and her husband learned that the foundation on their home is sinking – something that shouldn’t happen with a 50-year-old house. Instead of moving ahead with their home remodel, they’ll be sinking big bucks into repairing and solidifying the foundation. My friend told me, “This really hurts our 10-year plan to get this house livable.”

My Opinion

My eyes nearly popped out of my head. 10-year plan???? I don’t know about you, but when I think about making a home “livable” for my family, I think in terms of months, maybe a few years, not decades. My friend has spent tens of thousands of dollars already, and obviously anticipates spending much, much more over the next seven years. Of course, my practical mind keeps thinking, “If they had just stayed in their very ‘livable’ starter home for a few more years, they would have been able to afford a home that met all their requirements, without spending all the time and money to renovate a money pit.”

The moral to my story? I think this is a prime example of living beyond your means. My friend couldn’t afford to live in the type of house or neighborhood she thought she deserved, so she bought the cheapest house in the neighborhood. That would have been fine, if the cost to bring that house up to the neighborhood “standard” wasn’t costing her a fortune – and chewing away at whatever money she saved buying a foreclosure.

What do you think? Do you think she’s living beyond her means? Do you think she should have compromised? Why or why not?

Libby Balke

Libby is a jack of all trades, master of… well, you know how the saying goes. Media consultant by day, mommy by night, you can usually find her with a glass of wine in hand, provided the kids are in bed!

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